Kill Hollywood? You’re 100 years too late

A few weeks ago, we both read an article by Paul Graham, rallying Silicon Valley to “kill Hollywood.” And indeed, many companies in Silicon Valley are trying to free the entertainment industry from Hollywood’s death grip. But anyone who wants to “kill Hollywood” deserves a history lesson in its tenacious will to live.

Hollywood has risen from the dead time and again, and it will continue to do so no matter who tries to destroy it. Let’s take a look a closer look at Hollywood’s many reincarnations.

  • Root business: Manufacturing cameras and other film equipment. In the beginning, films weren’t so much entertainment as fodder for Thomas Edison’s New Jersey-based patent and hardware business, Edison Manufacturing Company. Edison entered the content business simply to create demand for his projectors and cameras (he owned most of the patents). Just as today’s technology moguls use every trick in the book to crush nascent competitors, Edison similarly used patent law to drive out upstarts, whose non-Edison equipment violated Edison’s legal stranglehold. Early filmmakers fled the East Coast for Southern California as much for the distance from Edison’s patent enforcers as for the sunshine.
  • Target demographic: Professionals and prosumers
  • Killed: When Edison Manufacturing Company’s patents expired in 1913
  • Driven by: Hardware and infrastructure
  • Root business: Advertising and promotion. In the 1950s, former agent Lew Wasserman turned television into the largest portion of the Hollywood promotion machine — advertising sales fueled Hollywood 1.3’s motor. Broadcasters competed for higher ad dollars from sponsors, whose only metric was the number of eyeballs watching the shows. What remained of the motion picture business became the summer blockbuster (“Ben-Hur,” Cinerama films,  “Jaws”, etc.) and foreign fare.
  • Target demographic: Couch potatoes and cineastes
  • Killed: Still alive, if not robust, and coexisting with subsequent iterations of Hollywood (sort of like when Neanderthals walked the earth with Homo sapiens)
  • Driven by: Content
  • Root business: Consumer electronics. The ability for consumers to watch content at home was allegedly going to destroy the motion picture industry. And in a preview of SOPA and PIPA, the studios tried and failed to have VCRs outlawed or crippled. In the end, the VCR became Hollywood’s main source of revenue for decades. A lot of crappy straight-to-video movies were made as a result, pushing quality content to the back burner.
  • Target demographic: Consumers
  • Killed: Still alive, though in its dotage
  • Driven by: Hardware and infrastructure
  • Root business: Cable. Turner’s realization that a physically wired nation offered an end run around expensive VHF licenses seems like a no-brainer today. “Narrowcasting” replaced broadcasting, but narrowcasting had its own poison pill. Smaller slices of the pie meant less money to spend on the ingredients for great programming. This began a race to the bottom in production costs. Compare the typical Hollywood 1.2 soundstage (say, a routine MGM musical with Technicolor consultants, lavish costumes and giant camera cranes) vs. the Jerry Springer set.
  • Target demographic: Advertisers
  • Killed: Still kicking, but YouTube and other user-generated content platforms are slowing it down
  • Driven by: Hardware and infrastructure
  • Root business: Streaming video. Worried that Netflix was going to destroy the industry, the studios and mainstream Hollywood were up in arms when it debuted. Instead, even though streaming revenue passed DVD revenue in 2010, the industry has come back stronger than ever. Hollywood proved it has the whip hand when it pulled a few streaming licenses from Netflix and sent its stock into a tailspin.
  • Target demographic: Consumers
  • Killed: Not yet, but individual content creators (HBO via HBO Go, for example) still control Netflix’s fate
  • Driven by: Content
  • Root business: User-generated content
  • Target demographic: Peers
  • Killed/shelf life: TBD. In this iteration of Hollywood, anyone with a Canon 550D can — theoretically — make a decent independent movie. Narrowcasting is going to a whole new level with fans creating entire web shows devoted to their favorite stars’ performances. The race to the bottom in production costs continues, but quality content remains sparse. Perhaps unintentionally, the YouTube generation is proving that quality content matters, and Hollywood productions trump home productions.
  • Driven by: Content

The Phoenix is the architect of its own immolation, and — if past is prologue — things are about to get hotter for Hollywood. But what will emerge will — once again — be a newer and stronger beast. Ironically, the very thing that makes YouTube and other UGC sites fantastic may be their undoing: rights issues. Filmmakers are willing to do whatever it takes to make it big — including giving away content for free, or insanely cheap, for the chance to be produced. That model is not sustainable, and the ultimate beneficiary is — surprise, once again – Hollywood.  Hollywood controls distribution, and if quality content comes cheaper, all Hollywood is doing is lowering its cost basis, and getting more filmmakers to compete for access to its distribution.

Until Silicon Valley gets into the content business en masse, which it likely can’t (due in large part to talent issues), Hollywood will retain its power. Netflix has made strides here, but YouTube, Amazon and other upstarts have a long way to go if they want to change 100 years of ingrained consumer behavior.

With credits that include “Die Hard 1” and “Die Hard 2,” “48 Hours,” “Commando” and “Tomb Raider,” Steven E. de Souza is one of a handful of American screenwriters whose movies have grossed more than $2 billion worldwide. He has also produced more than one hundred hours of network television.

Sunil Rajaraman is the co-founder and CEO of Scripted.com, a marketplace for businesses to hire freelance writers. Scripted began as an offshoot of the popular screenwriting and crowdsourcing site, Scripped.com.

Image courtesy of Flickr user greyloch.

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